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The cobra effect occurs when an attempted solution to a problem makes the problem worse, as a type of unintended consequence. The term is used to illustrate the causes of incorrect stimulation in economy and politics.
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The Cobra Effect
Incentive schemes are all very well, offering money in return for a change in behaviour, an increase in productivity, or solving a problem, but they need to be properly thought through or they can backfire spectacularly. Ill thought out schemes often incentivize people to make a problem worse, a phenomenon dubbed the cobra effect by economist, Horst Siebert, in 2001. It is alleged that during…
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